There has been a labor shortage in the United States since 2021. There are many interconnected reasons this shortage is happening. While it will eventually ease, now is an excellent opportunity to reevaluate your business’s relationship with outsourcing. It will help alleviate the effect of the Great Resignation on your business in the short term, and it will help with the capacity issues that are a given in the accounting industry in the future.
The Great Resignation: An Overview
In 2021, 4.5 million United States workers quit their job. This number broke all records. It reached its peak in November 2021. But although the rate at which employees are leaving their jobs slowed down somewhat in 2022, the trend is continuing. There is no shortage of jobs available. People simply don’t want to apply for them.
There are a few signs that things are improving. But businesses are still worried because, according to a survey by McKinsey, 40% of the 5,774 respondents were still somewhat likely to leave their job in the near future.
How Has the Labor Shortage Affected Businesses?
Needless to say, the scarcity of labor has had some devastating effects on business. Here are some of the problems it has caused.
Hiring and Retaining Employees Has Become Harder
Because employees are leaving their jobs in droves, most companies are struggling to both retain their current employees and find new employees to replace those who have already left. Talent pools are tapped, and unemployment is low, so finding qualified employees is harder. That makes the current job market an “employee’s market,” where it is easy for people to find a job and set their own terms because fewer applicants are looking.
Profit Targets Have Been Missed
Without employees to do the work, work either gets done late or not at all, and a business can’t grow when it can’t handle its current workload. This means revenue and profits are lower. When employees leave, they also take domain knowledge with them. It takes time to find, hire, and train new employees to take their place, and it takes even more time for them to know your business well enough to work efficiently.
Benefits and Salaries Have Increased
Because we are in an “employee’s market,” salaries and benefits are currently on the rise. Larger enterprises that have no problem offering more pay, larger bonuses, and other benefits that are hard to turn down are driving up salaries. That leaves very few applicants for those businesses that don’t have the capital to attract new talent when they lose current employees.
How to Solve the Retention Problem
Jobs are plentiful, but workers are in short supply. Just how do you solve this problem? The first step is retaining the employees you have. This will involve some change. If your employees aren’t happy with their current work environment, there are plenty of remote opportunities to choose from.
Flexible Work Arrangements
The pandemic and the growth of remote work proved a few things. Most employees could work just as efficiently from home as they could from the office. Remote or hybrid work, unlimited vacation policies, and flexible hours can go a long way toward keeping and attracting employees looking for a better work/life balance.
Offering your employees a path to advancing their careers can make them stick around. Allow them to build their skills with free training and seminars. Recognize employees who have done well to inspire them and your other employees to do better. Make the path to advancement in your firm clear so they can follow it instead of looking for greener pastures.
Employees are less likely to leave a job when they like the work they do, even if they are offered higher pay and benefits. But if their work is repetitive and tedious, it quickly becomes a grind, and their interest in staying changes just as quickly. In the modern workplace, there is no reason why tasks like data entry and bookkeeping can’t be automated or outsourced so that your staff can focus more on the quality of their work.
Outsourcing can help with an employee retention problem in a few ways. If your firm is dealing with capacity issues, unloading some accounting tasks to a business partner that can handle them efficiently can cost you less than hiring a new employee. The work you give to your outsourcing partner can scale with your capacity needs to keep your firm running smoothly, unlike an employee. Outsourcing mundane tasks also gives your staff the freedom to do more high-value work and expand their skills.
Managing Talent in Your Organization
Keeping your employees can be a tightrope walk in the current business environment. Competitive benefits and wages are being offered as a minimum standard to keep employees on the job and things running, let alone moving forward. As a result, your eventual success will depend on more than just throwing more money at your staff. You will have to change how your employees perceive your company and their relationship with it.
If you are currently struggling with staff exodus, outsourcing is always an option in the short term as well as the long term. Outsourcing will not only save your firm money compared to hiring new employees, but it will also allow you to tap into a global talent pool that may deliver services outside of your expertise. Not to mention that it can take some of the more tedious tasks off the hands of your staff.
Outsourcing some or all of your accounting tasks to PABS gives you the freedom to focus more on your business and frees up your personnel to work on high-value tasks that are more rewarding. Learn more by connecting with PABS today!